One easy way to save lots of money.

Business owners - here is how you can save lots of money. Ok are you ready?
Here it is….

*Get a proper contract in place*

I bet you are groaning. Well, it sounds easy I know, but hear me out on this.

I'm lucky (or perhaps unlucky) enough to have experience at both ends of the contract process. When drafting the contract, and then again when things go horribly wrong and there is a dispute.

Here are 3 examples of actual cases I've dealt with, where a simple clause or two could have saved a lot of money for at least one of the parties.

1. Jurisdiction/law clause
Saving: About £32,000
Problem: A business owner tried to draft their own plant hire contact from the internet but accidentally copied an Australian one. Oops.
Result: The business owner had to sue the defendant in Australia. Because of the extra costs/procedure/time etc, the client gave up.
Solution: Make sure your contract is subject to English law/jurisdiction.

2. Right to suspend services
Saving: About £48,000
Problem: A business supplying telecommunications services cut the services when their client didn't pay on time. However they had no right to so the client terminated and sued them for their losses.
Result: The business lost a major customer, lost the remaining revenue for their fixed term contract (5 years), and had to settle the client's claim.
Solution: Include a clear right to suspend the services when payment isn't received. Without that, there is generally no automatic right (unless you've got a specific type of construction contract but that’s not for today’s post).

And saving the best for last…

3. Liability limitation
Saving: About £1.2 million!
Problem: A gas installer made a mistake and consequently blew up a building. They tried to rely on a limitation clause in the contract but it didn't apply because it was unreasonable and also tried to limit liability for personal injury. Insurance cover sadly didn't kick in.
Result: The business is no longer operating...
Solution: Include a clear and well scoped liability limitation clause, with commercially sensible financial caps and no void provisions.

So, there you have it. If you want to get ahead of the curve, save money, and not get tangled up in a messy dispute - get yourself a good contract. And ideally get it drafted by a professional (hint, hint….).